H-1B Visa Program: Reforms Are Needed to Minimize the Risks and Costs of Current Program

Summary

(LINK TO FULL REPORT BELOW)

Congress created the H-1B program in 1990 to enable U.S. employers to hire temporary, foreign workers in specialty occupations. The law capped the number of H-1B visas issued per fiscal year at 65,000. Since then, the cap has fluctuated with legislative changes. Congress asked GAO to assess the impact of the cap on the ability of domestic companies to innovate, while ensuring that U.S. workers are not disadvantaged. In response, GAO examined what is known about (1) employer demand for H-1B workers; (2) how the cap affects employer costs and decisions to move operations overseas; (3) H-1B worker characteristics and the potential impact of raising the cap; and (4) how well requirements of the H-1B program protect U.S. workers. GAO analyzed data from 4 federal agencies; interviewed agency officials, experts, and H-1B employers; and reviewed agency documents and literature.

In most years, demand for new H-1B workers exceeded the cap: From 2000 to 2009, demand for new H-1B workers tended to exceed the cap, as measured by the numbers of initial petitions submitted by employers who are subject to the cap. There is no way to precisely determine the level of any unmet demand among employers, since they tend to stop submitting (and the Department of Homeland Security stops tracking) petitions once the cap is reached each year. When we consider all initial petitions, including those from universities and research institutions that are not subject to the cap, we find that demand for new H-1B workers is largely driven by a small number of employers. Over the decade, over 14 percent of all initial petitions were submitted by cap-exempt employers, and only a few employers (fewer than 1 percent) garnered over one-quarter of all H-1B approvals. Most interviewed companies said the H-1B cap and program created costs, but were not factors in their decisions to move R&D overseas: The 34 H-1B employers GAO interviewed reported that the cap has created some additional costs, though the cap’s impact depended on the size and maturity of the company. For example, in years when visas were denied by the cap, most large firms reported finding other (sometimes more costly) ways to hire their preferred job candidates. On the other hand, small firms were more likely to fill their positions with different candidates, which they said resulted in delays and sometimes economic losses, particularly for firms in rapidly changing technology fields. Limitations in agency data and systems hinder tracking the cap and H-1B workers over time: The total number of H-1B workers in the U.S. at any one time–and information about the length of their stay–is unknown, because (1) data systems among the various agencies that process such individuals are not linked so individuals cannot be readily tracked, and (2) H-1B workers are not assigned a unique identifier that would allow for tracking them over time–particularly if and when their visa status changes. Restricted agency oversight and statutory changes weaken protections for U.S. workers: Elements of the H-1B program that could serve as worker protections–such as the requirement to pay prevailing wages, the visa’s temporary status, and the cap itself–are weakened by several factors. First, program oversight is fragmented and restricted. Second, the H-1B program lacks a legal provision for holding employers accountable to program requirements when they obtain H-1B workers through a staffing company. Third, statutory changes made to the H-1B program have, in combination and in effect, increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility. Taken together, the multifaceted challenges identified in this report show that the H-1B program, as currently structured, may not be used to its full potential and may be detrimental in some cases. This report offers several matters for congressional consideration, including that Congress re-examine key H-1B program provisions and make appropriate changes as needed. GAO also recommends that the Departments of Homeland Security and Labor take steps to improve efficiency, flexibility, and monitoring of the H-1B program. Homeland Security disagreed with two recommendations and one matter, citing logistical and other challenges; however, we believe such challenges can be overcome. Labor did not respond to our recommendations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from “In process” to “Open,” “Closed – implemented,” or “Closed – not implemented” based on our follow up work.

Director:

Andrew Sherrill

Team:

Government Accountability Office: Education, Workforce, and Income Security

Phone:

(202) 512-7252

Matters for Congressional Consideration

Recommendation: To ensure that the H-1B program continues to meet the needs of businesses in a global economy while maintaining a balance of protections for U.S. workers, Congress may wish to consider reviewing the merits and shortcomings of key program provisions and making appropriate changes as needed. Such a review may include, but would not necessarily be limited to (1) the qualifications required for workers eligible under the H-1B program, (2) exemptions from the cap, (3) the appropriateness of H-1B hiring by staffing companies, (4) the level of the cap, and (5) the role the program should play in the U.S. immigration system in relationship to permanent residency.

Status: In process

Comments: When we determine what steps the Congress has taken, we will provide updated information.

Recommendation: To reduce duplication and fragmentation in the administration and oversight of the H-1B application process, consistent with past GAO matters for congressional consideration, Congress may wish to consider eliminating the requirement that employers first submit a Labor Condition Application (LCA) to the Department of Labor for certification, and require instead that employers submit this application along with the I-129 application to the Department of Homeland Security’s U.S. Citizenship and Immig
ration Services for review.

Status: In process

Comments: When we determine what steps the Congress has taken, we will provide updated information.

Recommendation: To improve the Department of Labor’s ability to investigate and enforce employer compliance with H-1B program requirements, Congress may wish to consider granting the department subpoena power to obtain employer records during investigations under the H-1B program.

Status: In process

Comments: When we determine what steps the Congress has taken, we will provide updated information.

Recommendation: To help ensure the full protection of H-1B workers employed through staffing companies, Congress may wish to consider holding the employer where an H-1B visa holder performs work accountable for meeting program requirements to the same extent as the employer that submitted the LCA form.

Status: In process

Comments: When we determine what steps the Congress has taken, we will provide updated information.

Recommendations for Executive Action

Recommendation: To help ensure that the number of new H-1B workers who are subject to the cap–both entering the United States and changing to H-1B status within the United States–does not exceed the cap each year, U.S. Citizenship and Immigration Services should take steps to improve its tracking of the number of approved H-1B applications and the number of issued visas under the cap by fully leveraging the transformation effort currently under way, which involves the adoption of an electronic petition processing system that will be linked to the Department of State’s tracking system. Such steps should ensure that linkages to the Department of State’s tracking system will provide Homeland Security with timely access to data on visa issuances, and that mechanisms for tracking petitions and visas against the cap are incorporated into U.S. Citizenship and Immigration Services’ business rules to be developed for the new electronic petition system.

Agency Affected: Department of Homeland Security

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To address business concerns without undermining program integrity, U.S. Citizenship and Immigration Services should, to the extent permitted by its existing statutory authority, explore options for increasing the flexibility of the application process for H-1B employers, such as (1) allowing employers to rank their applications for visa candidates so that they can hire the best qualified worker for the jobs in highest need; (2) distributing the applications granted under the annual cap in allotments throughout the year (e.g. quarterly); and (3) establishing a system whereby businesses with a strong track-record of compliance with H-1B regulations may use a streamlined application process.

Agency Affected: Department of Homeland Security

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the transparency and oversight of the posting requirement on the Labor Condition Application (LCA), as part of its current oversight role, the Employment and Training Administration should develop and maintain a centralized Web site, accessible to the public, where businesses must post notice of the intent to hire H-1B workers. Such notices should continue to specify the job category and worksite location noted on the LCA and required by statute on current noncentralized postings.

Agency Affected: Department of Labor

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Recommendation: To improve the efficiency and effectiveness of its investigations of employer compliance with H-1B requirements, the Employment and Training Administration should provide Labor’s Wage and Hour Division searchable access to the LCA database.

Agency Affected: Department of Labor

Status: In process

Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

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